Chevron in talks with Russia on Arctic exploration

MOSCOW -- U.S. oil major Chevron Corp. has held talks with a senior Russian government official on Arctic exploration, as the country's leader Vladimir Putin hinted he would allow non-state companies to operate in Russia's northern seas.

"Your country has enormous reserves, and the absence of large projects in the Russian Federation is a big gap in our portfolio," Chevron's Russia chief Andrew McGrahan told Deputy Minister for Natural Resources Denis Khramov at a meeting.

Unlike peers such as Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSA) and BP PLC (BP), Chevron failed to gain a foothold in Russia following the breakup of the Soviet Union.

The parties discussed the development of Russia's Arctic reserves as well as changes to the investment climate and tax regime for oil companies operating in the country, the ministry said in a statement.

The news comes just a day after Prime Minister Putin, who is strong favorite to win presidential elections Sunday, said non-state companies should be allowed to explore offshore reserves in order to avoid a drop in Russia's hydrocarbon production. Currently only state-controlled OAO Gazprom (GAZP.RS) and OAO Rosneft (ROSN.RS) have the rights to develop strategic offshore reserves.

During the past decade, Russia has kept a tight grip on its oil and gas reserves, but in recent years some deals with Western oil majors have started to take shape. Last year, ExxonMobil agreed to join Rosneft as minority partner in exploring three licenses in Russia's northern Kara Sea. And in 2010, Chevron teamed up--also with Rosneft--to develop offshore deposits in the Black Sea, although that project ran into problems and Chevron eventually pulled out.

Khramov said his ministry is preparing changes to the current legislation, including liberalizing access to offshore reserves and lower taxes. The changes will be reviewed by the government in the second quarter 2012.